If you could know the future, would you invest differently?
Rich Dad’s Prophecy is the book by Robert Kiyosaki which is subtitled:
Why the biggest stock market crash in history is still looming…
and how you can prepare and benefit from it!
This book was written (with co-author and Kiyosaki partner Sharon Lechter, CPA) in 2002. All of the predictions made in this book are on track, if not ahead of schedule.
The main “prophecy” is that in 2016 a BIG turmoil is coming in the stock market. This is the year that approximately 2,282,887 baby boomers turn 70, and are required BY LAW to make mandatory withdrawals from their 401(k) accounts. In 2017, the number of people turning 70 jumps by 700,000 to 2,928,818 and continues to rise every year thereafter.
What does this mean? Since the creation of pre-tax retirement funds, Americans have been incentivized to put/spend their savings into stocks and mutual funds. Markets go up ONLY when more people are buying than selling. 2016 is the year an astronomical bubble of retirees is forced into withdrawals. This is stipulated in the law that created 401(k) accounts specifically so that taxes are due and paid to the federal government NO LATER than age 70.
Kiyosaki tells the story of his “Rich Dad Prophecy” based on the enactment of “ERISA” (Employee Retirement Income Security Act of 1974). What his “rich dad” foresaw were the problems of passing control of retirement funds to individuals. These problems include:
1. Most people save nothing or far less than is necessary for retirement and medical expenses, which continue to rise.
2. Those who created 401(k) accounts were forced to become “investors,” an activity previously reserved for wealthy (and educated) speculators. In the process, the stock market was flooded with funds.
This is exactly what happened:
– Most people without corporate pensions, replaced by optional 401(k) plans, continued to spend their money on material goods and save little or nothing (in fact, racking up record amounts of consumer debt).
– The minority of workers who created investment accounts (they still number in the millions) pumped billions into stocks and mutual funds. The stock market rose to record highs on the inflow of cash.
Note: It is no coincidence that the passage of ERISA in 1974 is the bottom of the market, following a 1973-1974 drop to below 600 Dow Jones Industrial Average. 1974 was also the center of a recession triggered by the Middle East “oil embargo” and the “Nixon Shock” that followed the removal of the dollar from the gold standard.
As Kiyosaki’s rich dad predicted: “Always be on the lookout for changes in the law. Every time a law changes, the future changes.”
All of this background sets the stage for the predicted crash in 2016. With over 2 million retirees forced to sell stocks (and pay taxes on any gains), the market MUST shrink, or implode!
Kiyosaki wrote this book that foresees the impending crash in 2002. This is BEFORE the financial crash of 2007-2008 (which continues today). During this crash, the market lost 50% of its value from a high of 14,000. (He has since recovered 85% to 12,000.)
Americans continue to have dismal savings rates. Additionally, record unemployment caused by the current recession has forced many who DID save and invest to empty their retirement accounts. The number of new wage earners will not offset the number of people retiring. After years of recession, fewer people are actually employed, earn less, and invest less.
Combine these problems and you have a market in irreversible decline. As millions of other workers watch the value of their investments and retirement accounts decline, they too will start selling, trying to salvage the remaining value even if they have to pay penalties.
The process continues and the market spirals down at an accelerating rate! In the process, retirement savings and investment accounts in the millions will be wiped out.
Conclusion: the prediction of an accident in 2016 is probably optimistic! It may be here sooner as retirees can withdraw funds earlier – they’ll only delay withdrawals until age 70 if they don’t need the cash sooner!
Kiyosaki balances the dire prophecy with optimistic advice, specifically on how to build your “financial ark.” He writes, “Sometimes the greatest opportunities present themselves at times of greatest crisis. And for those who have positioned themselves well, it’s not about surviving the disaster, it’s about achieving financial independence and wealth.”
He continues: “But this is nothing to fear. The Rich Dad prophecy reveals not only the best ways to safeguard wealth, but also how to truly prosper from the events to come. The fears, dreams and actions of the baby boomers will control our economic future. You should consider building your own personal financial ark to stay afloat in the rough waters ahead. In Rich Dad’s Prophecy, you’ll discover how to prepare to thrive in the coming financial disaster. It’s a must read for those who want to support themselves and grow their wealth for years to come.”
Rich Dad’s Prophecy will do more than educate you on the predicted stock market crash. You’ll learn how to build your own personal “financial ark” that will ensure you not only survive the storm, but benefit from the turbulence to come. For more information on Rich Dad’s Prophecy, as well as Kiyosaki’s other books, resources, and seminars, visit Rich Dad’s website at RichDad.com.
